The trading of financial instruments such as stocks and bonds has largely become a computer supported operation. Almost all significant trading of securities is accomplished by computer pursuant to the established protocols of the major exchanges. For example, on the New York Stock Exchange, orders for specific securities are entered at a terminal operated by a licensed agent with a "seat" on the exchange. This order is processed through a stock "specialist", a firm that is obligated to manage transactions for a given security. The specialist clears the trade at a price reflecting the current supply-demand environment for that security. Upon confirmation of the trade, the parties up-date their respective positions via computer controlled memory. For the most part, the above transaction is accomplished through computer terminals linked together by communication busses or telephone lines.
A different arrangement is provided for certain over the counter trading associations of which NASDAQ (National Association of Securities Dealers) is probably the most prominent. These exchanges avoid the use of specialists in specific stocks and membership does not invoke a seat on an exchange. To the contrary, NASDAQ is established as a computer integrated market of select securities, wherein members trade as agents for their customers and make markets in specific securities themselves. To operate effectively in this environment, the members must have a sophisticated communication system that permits entry and up-dating of current stock positions supporting the desired transactions. This involves the creation and operation of a central on-line database for the securities to be transacted.
Members enter into the NASDAQ database via a remote terminal and input their requests. For example, if a dealer represents a prospective buyer of stock in Apple Computer, this dealer inputs a request for e.g., 100 shares of Apple stock at a "bid" price of $44.00. This information is recorded into the database and becomes available to other participants including those making a market in Apple stock at a certain "ask" price. If an agreed price is received, a deal is confirmed and the respective positions of the parties up-dated.
These operations are heavily dependent on appropriately programmed computer systems. For example, see U.S. Pat. No. 4,674,044 to Kalmus, et al., titled "Automated Securities Trading System". The teachings of this patent are incorporated herein as if restated in full. This system provides automated securities trading at established parameters for the buyer and seller. In addition to supporting such transactions, dealers also participate in making markets in individual securities, i.e., the dealer is also the principal and sells the securities out of dealer inventory.
The above operations are performed in real time with the participation of hundreds of competing buyers and sellers forming a highly competitive environment. A central element to success in such a market is the rapid access to vital information on current market conditions in terms of market depth and recent swings and the ability to enter quickly to establish or withdraw a price. For example, a trend away from a given security is first indicated by a drop of market makers on the inside market. Participants with an early indication of the souring market are in the best position to profit therefrom (or reduce their exposure).
In the past, the traders were largely dependent on information supplied directly from the database of transactions in a form selected primarily for ease in communication. Although the on-line data was rich with salient market information, the form of this data simply was not optimized to permit rapid extraction and review to support trading; to the contrary, this feed data was mostly devoid of trend information in the market and the traders had to mostly rely on intuition and luck in predicting market shifts. The recognition of this inhibition formed the impetus to the present invention.